Small hydropower could attract US$2.7 billion in investment in Brazil

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Brazil’s small hydroelectric power segment has the potential to grow 30% in the next three years, reaching 8.13 GW, the head of Associacao Brasileira de Fomento as Pequenas Centrais Hidreletricas (ABRAPCH), Paulo Arbex, told BNamericas.

The growth would be the equivalent of 1.88 GW of new plants, with investment of more than BRL15 billion (US$2.73 billion). More than 150,000 jobs would be created.

A key contribution is expected to come from Eletrobras’ privatization, which foresees the mandatory contracting of about 2 GW of small hydro plants in regulated auctions by the end of 2026.

However, the growth also depends on overcoming several obstacles, including relatively high taxation and environmental licensing hurdles, the reduction of subsidies for fossil fuels and remuneration for environmental services performed by small hydro units.

According to Arbex, the growth of small hydro plants in the country could help reduce power bills and the emission of greenhouse gases, which have skyrocketed amid a severe drought. “The solution to the water crisis goes far beyond the generation of electricity; it puts our modern irrigated agriculture at risk, makes the water supply of our cities unviable and our industry’s production more expensive,” he said. 

The crisis is linked to the “demonization” of hydroelectric plants and reservoirs, he said. “From 2000 to 2021, energy consumption grew 80%, while reservoirs grew by only 30% and installed hydro capacity by only 39%. This created a reservoir deficit of 50% and a hydroelectric deficit of 39%,” Arbex said.

Despite the drought, in the first half of this year hydroelectric plants accounted for 72.6% of all the electricity consumed in Brazil and more than the 61% of installed capacity.

“The coverage of consumption much higher than the percentage in the matrix by hydroelectric plants has been occurring since 2005 and is a strong indication that reservoirs have been used far beyond their capacity for at least 15 years,” Arbex said.

Author

  • Elizabeth Ingram is content director for the Hydro Review website and HYDROVISION International. She has more than 17 years of experience with the hydroelectric power industry. Follow her on Twitter @ElizabethIngra4 .

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Elizabeth Ingram is content director for the Hydro Review website and HYDROVISION International. She has more than 17 years of experience with the hydroelectric power industry. Follow her on Twitter @ElizabethIngra4 .

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